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Good morning,

Markets are called to open flat this morning. This is what's happening today:

  • Asian stocks dropped from the highest level in 20 months and commodities sank to their lowest since July as China’s economic growth unexpectedly eased in the first quarter amid lower gains in factory-output;
  • Gold, which plunged into a bear market last week, extended a rout to the lowest level since April 2011 on expectations that demand for haven assets will contract as the global economy improves. Silver slumped;
  • Companies in Europe reporting results today – Kuehne + Nagel International, Galo Energia, H&M, Publicis, Maurel et Prom;
  • Companies in the US reporting results today – Charles Schwab, M&T Bank, First Republic, Citigroup, Harvest Natural Resources, GMX Resources

Cyprus’s risk of default and an exit from the euro area will “remain elevated in the coming years,” even after the Eurogroup’s formal approval of its EUR10 billion bailout last week, Moody’s Investors Service said today.

China’s gross domestic product rose 7.7% from a year earlier, the National Bureau of Statistics said in Beijing today. That compares with the 8% median forecast in a Bloomberg News survey of 41 analysts and 7.9% in the fourth quarter. March industrial production gained less than estimated.

First-quarter financial results reported by Wells Fargo and JPMorgan on Friday indicate the housing market may be slowing. JPMorgan reported a 4 percent drop in total revenue from the first quarter of last year, while Wells Fargo reported a 1.7 percent drop. JPMorgan said its mortgage profits fell 31 percent; Wells Fargo said its mortgage-banking income was down 2.7 percent.

Overall, JPMorgan reported $6.53 billion of net income, a 33 percent increase, helped by in increase in its investment banking and lower expenses. Wells Fargo had $5.1 billion profit, a 22 percent increase. Earnings exceeded analysts' expectations because the banks reduced money being saved to cover possible future losses, not because of growth in their businesses.

Declining mortgage profits for Wells Fargo in particular may be a warning sign for the overall mortgage industry. JPMorgan is an investment banking giant, but Wells Fargo is the largest mortgage originator and is viewed as a benchmark for mortgage industry. A shrinking mortgage pipeline for Wells Fargo could mean that demand for mortgages is slowing down.

Citigroup report results today. The stock closed the session on Friday at $44.78 and Deutsche Bank Research have a price target of $55. We have a Buy rating on Citigroup. We believe the risk/reward is favorable given: 1) good leverage to a macro recovery, 2) improving expense leverage, 3) potential strategic actions, 4) good progress de-risking, 5) downside protection given solid capital/reserves; 6) less mortgage-related risks; 7) better potential revenue growth in international/emerging markets, and 8) the valuation remains attractive. Buy.

For more information on Citigroup or other stocks and bonds we follow, contact our offices on 25688688.

Good day and happy trading!

Kristian Camenzuli